Beijing
Tesla on Monday said it has cut prices in China for its Model Y long-range and performance versions starting on Aug. 14, sending its shares lower on concern of further pressure on its profit margins.
The electric car company reduced the starting prices of both models by 14,000 yuan ($1,934.58). The Model Y Long Range’s starting price drops 4.5% to 299,900 yuan and the starting price of the Model Y Performance is now 349,900 yuan, down 3.8%.
In the same announcement, Tesla also said it would offer insurance subsidies in China of 8,000 yuan for buyers of the entry-level, rear-wheel-drive versions of the Model 3 inventory vehicle between Aug. 14 and Sept. 30.
ISI analyst Chris McNally said in a research note that he expects similar select price cuts in the U.S. and Europe and that could lead to about 100 basis points of sequential pressure on third-quarter margins. Shares of the company fell 2.8% in U.S. premarket trade.
Last month, Tesla CEO Elon Musk said further price cuts were a possibility, even if it squeezed the automaker’s margins. Tesla has slashed prices several times in the United States, China and other markets since late last year, and given other incentives to reduce inventory, trying to shield itself against competition and economic uncertainty. Sales of Tesla’s China-made vehicles fell 31% in July from June, data from China Passenger Car Association (CPCA) showed earlier this month, marking its first month-on-month decline since December.
